By Keith Mullin, Editor at Large, International Financing Review
– the views expressed are his own –
LONDON, Nov 12 (Reuters) The popular quote about focusing on the journey rather than the destination could well have been written about current moves to create the next generation of bank capital instruments and determine the place of hybrid debt in bank capital structures.
Stakeholders – politicians, regulators, supervisors, issuers, intermediaries and investors – have spent an inordinate amount of time trying to come up with a formula that will offer affordable hybrid capital to banks that meets lawmakers’ demands for a robust safety net (i.e. one that absolves taxpayers of responsibility) and at the same time hits investors’ return and risk metrics. Yet for all of the progress made so far, we are nowhere near a conclusion on rules and processes that will facilitate any of the above. (more…)